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Discussion Starter · #1 ·
My wife is on CPP disability, and makes around 9k a year, meaning I can claim the spousal amount at tax time.

She has RRSP contribution room. If she contributes 9k to RRSPs in a year, would that lower her income to 0, allowing me to claim the full spousal amount?

I'm curious whether it's worthwhile for her to contribute RRSPs or not. I wouldn't want her contribution room to go to waste if it makes sense to use it.
 

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It really is not the best way to reduce overall taxes to the family. Your wife would reduce her taxable income and you would be able to claim a higher spousal exemption, but the that only creates more tax credits on your tax return. If you live in Ontario that would amount to about a savings of about 20%. If you make a RRSP contribution to your own account or a spousal account this will reduce your taxable income. If you are in a higher tax rate than your wife you would generate a savings at your marginal tax rate. Let's say your income is $70,000 then your marginal rate is over 29% and would generate more tax savings.
 

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Discussion Starter · #4 ·
Thanks! This definitely answered my question. I'm still just figuring this stuff out, and I thought the spousal amount just deducted off my income like other deductions, and I would save my marginal tax rate. Now I've dug in more and see that's not how it works, and you're right, it would be around 20% savings. So that wouldn't really make much sense to bother using, as we'd likely just have to spend that much or more in taxes to withdraw it later.

It really is not the best way to reduce overall taxes to the family. Your wife would reduce her taxable income and you would be able to claim a higher spousal exemption, but the that only creates more tax credits on your tax return. If you live in Ontario that would amount to about a savings of about 20%. If you make a RRSP contribution to your own account or a spousal account this will reduce your taxable income. If you are in a higher tax rate than your wife you would generate a savings at your marginal tax rate. Let's say your income is $70,000 then your marginal rate is over 29% and would generate more tax savings.
 
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